Lawrence school district to consider tax rebate for Masonic Temple overhaul

With revenues dwindling, budget cuts looming and renovation and construction needs mounting, the Lawrence school district is being asked to endorse a tax rebate that could save a downtown property owner hundreds of thousands of dollars in property taxes.

Consider it a matter of financial addition by subtraction.

“The district doesn’t lose anything,” said Shannon Kimball, a member of the Lawrence school board. “And if this building is improved and put to good use, it will increase our budget in the long run.”

Kimball and her board colleagues will be asked today to sign off on a request from Consolidated Properties to approve a 10-year rebate program for an anticipated increase in property taxes for one of the company’s properties: the Masonic Temple, 1001 Mass.

The downtown property, a windowless Egyptian Revival meeting hall listed as a landmark on the National Register of Historic Places, is slated for upgrades estimated to cost at least $800,000, all so Maceli’s can expand its catering operation and accommodate more wedding receptions and other events downtown.

But Consolidated Properties maintains it wouldn’t be able to do the project, and make it work for Maceli’s, without a tax incentive offered under the Neighborhood Revitalization Act: Consolidated Properties would continue to pay the full amount of property taxes it currently pays on the building but then get a break on the amount that would be paid on the improvements.

Paul Werner, an architect working on the project, figures that Consolidated Properties would save about $330,000 in taxes during the coming decade, money that would allow the company to charge Maceli’s a correspondingly lower rent.

Once the decade passes, the rebates — starting at 95 percent in year one and declining to 50 percent in year 10 — would be gone, leaving Consolidated Properties to pay the full tax bill on the entire building and all its improvements.

And by the time another five years had passed, according to an analysis conducted by a specialist at City Hall, the school district could expect to have received nearly $60,000 on top of and above the ongoing payments on the building’s current tax bill.

Translation: The district comes out $60,000 ahead, without having spent a dime to help the building get new life.

“It can only have positive benefits for the school system in the long run, because we don’t have to give up anything and, in return, in the long run we will benefit,” said Kimball, who reviewed the project’s financials earlier this month as a member of the city’s Public Incentives Review Committee. “If this creates additional jobs and brings additional students to Lawrence, those are great benefits for us.”

Lawrence and Douglas County commissioners also have approved the plan, confident that any dollars they spend now, such as to help Consolidated Properties install fire-suppression sprinklers in the building, would come back in the form of higher tax revenues and other ancillary benefits later.

The school district, meanwhile, can’t really bank on many additional dollars as a direct result of the project. The bulk of the district’s property-tax revenues are sent to the state, which in turn distributes money back to districts by following a finance formula based on enrollment.

The district, therefore, gets most of its money based on how many students it has, not by how valuable particular properties are.

But the district does assess taxes to finance capital improvements — such as replacing school roofs, rebuilding parking lots, buying computers and other items of technology — and those tax revenues can rise as the values of properties in the district climb. There’s where the bulk of the district’s projected $58,505 increase in revenues would come from.

The Masonic Temple, empty for nearly eight years now, will be slated for its overhaul: installation of new heating and air-conditioning systems, new wiring, new plumbing and an elevator, plus upgrades to the mezzanine to permit table seating. The building’s overall capacity would be 499.

Work is expected to begin in the middle of November and be finished in March, to be ready for the wedding season.

None of it would be possible with the provisions of the Neighborhood Revitalization Act, Werner said.

“This project needs the incentives or it wouldn’t be getting done,” he said.

Finally someone who understands how a tax rebate works. The City and School district are not losing any tax dollars, only gaining more long term tax dollars. And rich developers are not getting their taxes reduced, only having the taxes on the renovations slowly increased.

Another little known fact. Before Compton bought the Masonic Temple, the city was receiving $0 in taxes every year, because it was a tax exempt organization. Since it has sat vacant, the city has receiving more taxes in one year than all the previous years combined...

“The district doesn’t lose anything,” said Shannon Kimball, a member of the Lawrence school board. “And if this building is improved and put to good use, it will increase our budget in the long run.

Nonsense. That statement assumes that absent the school district following in step with the actions of the city and county commissions, the project will be 86ed.

Meatloaf once sang that "two out of three ain't bad."

Get a little backbone, Ms. Kimball, consider the fact that both the Lowes and Olive Garden projects will probably bear fruit despite having their tax abatement requests denied, and learn how to play a little poker.

The fact of the matter is that the district will lose a lot--$330,000--if Compton decides to go ahead with the project even if the school district denies the request. And from Compton's perspective, "a bird in the hand is worth two in the bush." If Compton doesn't follow through--and considering that a second recession is possible--there is a chance that the property will sit for several more years, costing Compton hundreds of thousand in lost revenue on his investment and negative cashflow in the form of ongoing property tax and insurance.

While I could be wrong, I think the smart money says that the project is a go even if the School Board denies the request.

Granted, if the school board capitulates they are guaranteed an extra $60,000 in revenue over ten years. But at the same time, they lose the opportunity to increase that $60,000 by 5 and a half times if they call Compton's bluff.

Compton plays hardball. The school board should take a lesson from Doug and respond in kind.

Such faulty economic logic. The true economic cost is a loss of $270,000. There were/are other businesses interested in that location that would be able to pay market rates to lease it. Why should the city/school district, etc be spending hundreds of thousands of dollars in a time of economic crisis to prop up the profit margins of a couple of corporations?

"Paul Werner, an architect working on the project, figures that Consolidated Properties would save about $330,000 in taxes during the coming decade, money that would allow the company to charge Maceli’s a correspondingly lower rent."

So because the property tax rebate is reduced by 5% every year, somewhere between the middle and end of the ten-year period, Macelli's rent will have been raised to a level he can no longer afford, putting him out of business, and the building sits empty again. Correct?

Don't forget the school board will be asking the rest of us taxpayers gor even more money very soon. The district already has plans for another bond issue maybe within a year. Compton has lobbied these board members hard but in a soft way. Consolidated still has to pay tax on the building no matter what. Why the giveaway from the board?

Compton's incremental approach to seeking tax abatements is intentionally deceptive. First he sought the abatement from the city, and made no mention of his intention to seek an abatement from other taxing entities. After receiving a "yes" from the city, he went to the county, where he obviously made the arugment, "hey guys, the city has already approved it, so it's obviously a good deal for the taxpayers." Similar to his early deception, he never mentioned to the county that after he was done with then, his next stop would the school district.

That deception, alone, should be sufficient reason for the school district to deny his request.

Quick note: Consolidated Properties has sought the approval of all three governments -- the city, the county and the school district -- from the beginning. It's just that the three governments' elected officials don't all meet during the same night.
The city approved the rebate first (although it still needs to approve the rebate once again, "on second reading," for it to then to be on track for implementation).
The county approved it last week. I was at that meeting, and there was discussion about how the matter would be going, next, to the school board for consideration.
School board members will have their chance to vote tonight.
Before any of those governmental entities had a chance to consider the request, however, it was reviewed by the Public Incentives Review Committee, an appointed group that includes members from the Lawrence City Commission, Douglas County Commission and Lawrence school board.
Here's the link to that story:
http://www2.ljworld.com/news/2011/sep...
The request has followed the same process that at least one other such request has followed, and I'd venture to say there will be more.
- Mark Fagan
Schools reporter

"Consolidated Properties has sought the approval of all three governments -- the city, the county and the school district -- from the beginning. It's just that the three governments' elected officials don't all meet during the same night."

Thanks for the clarification, Mr. Fagan. Unfortunately, you just shot yourself in the foot, and I must lower your grade on the stories from a B+ to a C-. I may be wrong, but your less than stellar reporting caused the three abatements to appear incremental.

In my opinion, when you wrote the story about the request to the City Commission, you had an obligation to the public to mention the fact that Compton was also seeking abatements from the County and the School District.

Am I missing something here? Did you mention all three taxing entities when the story first broke? If you did, then my apologies are in order.

I would like to know the total amount that Compton is saving in tax abatements from the Masonic Temple, the new apartment building at 9th @ New Hampshire, and the coming Hotel across the street. I'm just guessing that it's somewhere between $750k & $1 Mil.

Don't worry though, Lawrence Public School students can just do with a little less education, quality lunches, arts, activities and sports to help out Compton. Heck, that's the least those little ingrates can do.

We should start sending Lawrence school kids to Compton sites to do little, regularly scheduled "field trips" (free labor). Just think of the great real-world experience they would get. That's much better than book learning if you ask me. All that time the kids are doing work for Compton is time that we're not having to pay a teacher to make them read books they don't want to read anyway. This is a win-win situation.

With revenues dwindling, budget cuts looming and renovation and construction needs mounting, the Lawrence school district is being asked to endorse a tax rebate that could save a downtown property owner hundreds of thousands of dollars in property taxes.

Consider it a matter of financial addition by subtraction.

“The district doesn’t lose anything,” said Shannon Kimball, a member of the Lawrence school board. “And if this building is improved and put to good use, it will increase our budget in the long run.”

The school district does lose a great deal over the next 10 years say about $500,000. The school district needs every nickle and dime. USD 497 is a school district NOT tax dollar give away city or county commission. USD 497 simply cannot afford this reckless endeavor.

"the Lawrence school district is being asked to endorse a tax rebate that could save a downtown property owner hundreds of thousands of dollars in property taxes."

These are the very actions that demand voter approval. I believe this after reading another action that provided a first management property a tax incentive at the former Strong Office Supply building in which the rehab was granted some tax dollar relief in April of 2011.

"Sharon Kimball of the Public Incentives Review Committee and a USD 497 board member. “If this creates additional jobs and brings additional students to Lawrence, those are great benefits for us.”

This sounds like a speech coming from the Chamber of Commerce which is home to the local real estate development industry and their executives More students cost the school district more and more money.

And it is not the concern of the USD 497 board of education whether more students come to Lawrence or not.

It is the concern of the USD 497 board of education to manage school tax dollars responsibly and provide the best education to the students currently in the school district.